Many state and provincial governments in North America and Europe have mandated sliding scale electrical energy rates or electrical rates that change based on the time of day. Smart meters are tools used to implement this type of “time of use” pricing. Utilities can track individual consumer energy use, for example, on 15 minute intervals and charge energy prices based on the time of use.
The electrical markets are generally monitored or priced by a government body independent from the local distribution companies (LDCs). These government bodies are referred to as Independent Electric System Operators (IESOs). The IESO is charged with buying and selling electrical energy at hourly spot prices. Energy prices can fluctuate dramatically. These fluctuations can be caused by a number of factors, such as weather, supply, demand, type of supply, etc. As energy is purchased from generators and sold to utilities, consumers are exposed to open markets where price fluctuation exposes them to the risk of consuming high amounts of energy when energy prices are high. Exposure to high energy prices is avoidable if consumers have access to hourly market energy price data and can make educated decisions when to consume or when not to.
An IESO buys electricity from energy generators and sells electricity to LDCs for consumers to purchase. Market operators publish prices for utilities and consumers to view on the web or internet. This data is used by energy market retailers and LDCs to provide real time energy hourly pricing. Hourly pricing is generally provided in a graphical form may be provided in simple line by line script and downloadable text.
Many consumer appliances and devices require electricity either to store in a battery in which case the consumer may not care at what time the electricity is received. For example, an electric or hybrid plug-in vehicle may require some number of kilowatt-hours of charging within a given period, such as 10 kilowatt-hours within a 24 hour period when the vehicle is not in use but can be connected to a power source. With a 1.5 kW, 120 volt supply, this may require about 7 hours out of the 24 hour window. However, if the user plugs the vehicle in when he parks it, that may happen to coincide with a high-cost time for using power, so the user may prefer to not have charging begin until later when the electricity cost is lower. However, it is difficult and inconvenient for a user to obtain and use such information.
The same consideration applies to other devices or appliances that need to operate for a certain amount of time within a larger time window, such as a clothes washer or dryer.